South Africans may be breathing a collective sigh of relief at the news of some respite at the petrol pumps from Wednesday onwards, but the reality is that this is simply a drop in the ocean of soaring living costs that have pushed consumers to the brink of despair.
While the announcement by the Minister of Mineral Resources and Energy, Gwede Mantashe, of a decrease in the price of petrol for both 93 and 95 octane petrol of R1.32 per litre has been met with widespread praise, it will make no real difference to the lives of most citizens who have had to absorb massive fuel price hikes over the past year.
Official statistics show an astronomical year-on-year increase of 38%, from R18.11 on 4 August 2021 to R25.42 on 3 August 2022.
Not only has 75 cents per litre been added back to the general fuel levy this month after a temporary reduction was introduced in April, no other immediate relief is on the cards to mitigate the cost-of-living crisis currently sweeping through the country.
CEO of Debt Rescue, Neil Roets, who has been an outspoken advocate for the consumer since pre-pandemic days, says: “Although government is to be commended for starting the process of introducing a price-cap for 93 octane petrol, the reality is that much more is needed to prevent millions of consumers from sinking into poverty. Long, drawn-out plans by government – with all good intentions - that will probably only be implemented in 2023 will simply be a case of too little too late.”
Another major red flag is the closure of a number of local petroleum refineries, which poses a serious economic issue for South Africa - one that jeopardises more than just security of the supply of products such as petrol and diesel.
Energy consultant Citac said in a recent article that output by SA’s refineries halved between 2018 and 2022, and Phindile Masangane, CEO of the Petroleum Agency SA, has warned that new rules that have lowered the sulphur content allowed in the country’s diesel fuel, will force some oil refineries to upgrade their facilities at costs that could run into billions of rand.
This will ultimately mean that the country will become more reliant on petroleum imports and will be more exposed to potential disruptions in supply.
Roets warns that by far the most pressing issue is food inflation and the resulting misery it brings.
“With almost 20 million people going to bed hungry every night, and of these, seven million people suffer from chronic hunger. This is not the time to turn a blind eye. The welfare of the very young and the very old is at stake here. Along with the devastation of entire communities, we should be very worried about social instability. The warning signs are there for anyone to see.”
According to the monthly retail report from market-research and global consulting company NielsenIQ, based on sales data acquired from 10,000 Woolworths, Spar, Pick n Pay and Checkers stores countrywide - surging food inflation is forcing SA consumers to cut items such as fresh milk and Vienna sausages from their list of essentials.
Consumer inflation’s acceleration to a 13-year high is being clearly reflected in shopping patterns, the market-research firm said in its latest SA retail report, with sales volumes of items such as frozen meat and cooking oil starting to show significant declines as surging prices bite.
“The sad reality is that more and more credit-worthy consumers will be purchasing these and other essential foods and household items with their credit and store cards every month, just to get by,” says Roets.
Debt Rescue says it has seen a year-on-year increase in the number of South Africans seeking debt relief – and there is no respite in sight.
“My advice to those who are in a debt trap is to seek help from a registered debt counsellor who can assist them to manage their financial predicament. This has been a very successful solution for thousands of consumers who are plagued by over-indebtedness,” he concludes.